Circadian fluctuations of fear and anxiety symptoms are observable in persons with post-traumatic stress disorder, generalized anxiety, and panic disorder; however, the underlying neurobiological mechanisms are not sufficiently understood. In the present study, we investigated the putative role of inhibitory neurotransmission in the circadian fluctuation of fear symptoms, using mice with genetic ablation of the γ-amino butyric acid (GABA) synthesizing isoenzyme, glutamic acid decarboxylase GAD65. We observed in these mutant mice an altered expression of conditioned fear with a profound reduction of freezing, and an increase of hyperactivity bouts occurring only when both fear conditioning training and retrieval testing were done at the beginning of their active phase. Mutants further showed an increased arousal response at this time of the day, although, circadian rhythm of home cage activity was unaltered. Hyperactivity and reduced freezing during fear memory retrieval were accompanied by an increased induction of the immediate early gene cFos suggesting hyperactivation of the hippocampus, amygdala, and medial hypothalamus. Our data suggest a role of GAD65-mediated GABA synthesis in the encoding of circadian information to fear memory. GAD65 deficits in a state-dependent manner result in increased neural activation in fear circuits and elicit panic-like flight responses during fear memory retrieval.